Pitching the Small Business versus the Large Enterprise
Trying to find your renewed niche in this rough-and-tumble economic environment? Well, new research gives a glimpse that if you need to find a job, small private companies may be your best bet since they are hiring more rapidly. But, if you’re looking for new business, big budgets and new projects, focusing on larger private companies could be your saving grace as, on a whole, they are planning to allocate more cash to capital investments and new projects.
When it comes to smaller versus larger companies in today’s economic environment, there’s more of a difference than revenue numbers. New research from PricewaterhouseCoopers (PwC) in the form of its new Private Company Trendsetter Barometer, shows that projected revenue growth for small companies over the next twelve months is almost 10 percent higher than for larger companies –defined as being on average 24 times larger than what PwC terms "small companies."
Also, smaller companies plan to hire more workers—59 percent of small companies anticipate hiring increases versus 44 percent of large businesses, and the overall workforce growth is planned at 5.5 percent for smaller companies versus 1.5 percent for larger private companies.
However, if you’re looking for new business and big budgets for projects, resellers may want to stick with larger businesses. The bigger firms are planning what PwC terms "major capital investments," compared with 27 percent of smaller firms. Larger companies are also planning to allocate more cash to develop and acquire new products and services.
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But, smaller businesses are recovering quicker and, according to the research, are more apt to securing bank loans than larger companies (5 percent versus 2 percent, respectively).
Diversifying across geographies always mitigates risk in rough economic times, and today, this is no different. The new report shows private businesses with an international presence may be prime targets of new technology sales. Specifically, companies operating in the markets of China, India and Brazil expect to get over 30 percent of their revenues from those areas and are expected to do better--and spend more--than those companies that operate solely domestically.
"Increased investment in the business, particularly in operational spending, is integral to laying a foundation for growth," says Ken Esch, a partner with PricewaterhouseCoopers' Private Company Services practice.
Although growth is slow and steady, there remain heavy barriers to growth reported by private-company CEOs, which provide a glimpse into the business pains companies are feeling. According to PwC’s research, concern remains about straggling lack of demand, cited by 74 percent of respondents. Other top concerns were regulatory/legislative pressures (48 percent), increased taxation (45 percent), decreasing margins (40 percent) and lack of capital (25 percent).